PLIGHT OF FARMERS DIRECTLY LINKED TO SUBSIDIES GIVEN BY DEVELOPED WORLD, SAYS JAITLEY
AGRICULTURE FLAGGED AS INDIA’S KEY CONCERN IN WTO NEGOTIATIONS
STATEMENT BY THE COMMERCE AND INDUSTRY MINISTER OF INDIA AT THE CANCUN INAUGURAL PLENARY SESSION
Date : 11 Sep 2003
Location : New Delhi
The plight of farmers in developing countries is directly linked to the level and kind of subsidy given in the farming sector in the developed world, Mr. Arun Jaitley, Minister of Commerce & Industry and Law & Justice, Government of India said in a forceful statement at the Opening Plenary of the 5th Ministerial Conference of the World Trade Organisation (WTO) in Cancun (Mexico) yesterday. Clearly flagging agriculture as a key concern for India, Mr. Jaitley made it plain that the commitment by the developed countries to eliminate distortions in world agriculture caused by their policies held the key to resolving differences among member countries in this vital area. Stressing that the development dimension must occupy centre stage of the negotiations, he called for the Ministerial Conference to move towards a more inclusive and transparent decision making process.
Pointing out that the protection in the developed countries faced by developing country exporters in agriculture is four to seven times higher than in manufactures, Mr. Jaitley said that the effect was to stimulate over production in high cost rich countries and to shut out potentially more competitive products from developing countries. "It is no surprise that over the past few years, agricultural exports from developing countries to developed countries grew at just half the rate they did to other developing countries….. Let us also remind ourselves that the agriculture subsidies provided by OECD countries are more than six times what they spend on official development assistance for developing countries. OECD governments support sugar producers at the rate of US $ 6.4 billion annually – an amount nearly equal to all developing country exports. Subsidies to cotton growers in a developed country totalled US $ 3.7 billion last year, which is three times that country’s foreign aid to Africa. The net effect of subsidising agriculture in developed countries at the expense of products of the relatively poor in developing countries is to aggravate global income inequalities. On the other hand, against equity, justice and fair play, developing countries are being asked to liberalise their agriculture. What the farmers in developing countries demand is protection from distortions in the trade of agricultural commodities, created through the high level of subsidies in the developed countries. The plight of these farmers is directly linked to the level and kind of subsidies… in the developed world. Hence, it would be difficult for us to agree to negotiations, which could potentially place at high risk the very livelihood of 650 million people in India, who are solely dependent on agriculture. It is only when the developed countries agree to take five steps forward in the removal of trade distorting subsidies that the developing countries can take one step forward in the area of market access. The legitimate concerns of billions of farmers in developing countries, for whom agriculture means survival and not commercial operation, cannot be sacrificed to sub-serve agri-business profits of a few millions elsewhere sustained through $ 1 billion subsidies each day in the OECD countries", Mr. Jaitley said.
Mr. Jaitley underlined the urgent need to bring down the high tariffs and non-tariff barriers on products of export interest to developing countries in order to secure sufficient gains from globalisation for them. Special & Differential (S&D) Treatment for developing countries and policy space to deal with sensitive products in agriculture taking into account their development needs, including rural development and food security and livelihood concerns remained an integral part of all elements of negotiations. "India reiterates that under no circumstances can it accept any form of harmonisation of tariffs in agriculture or obligations to create and expand tariff rate quotas. India along with 19 other members has put forward joint proposals on agriculture that we believe offer a constructive and meaningful alternative. We look forward to discussing it at the Conference", the Minister added.
On market access negotiations for non-agricultural products (industrial tariffs), Mr. Jaitley emphasised that suggestion for mandatory harmonisation and elimination of tariffs would be most iniquitous to developing countries. Further, he pointed out that being at different stages of development, we did not have capacities to understand binding obligations in all the seven sectors proposed for tariff elimination.
Expressing deep disappointment that the development dimension envisaged in the Doha Work Programme had been given short shrift, Mr. Jaitley said that the draft Cancun Ministerial Text was grossly inadequate on implementation issues and would severely affect the interests of developing countries in agriculture, industrial tariffs and Singapore issues. "We cannot escape the conclusion that it does not accommodate the legitimate aspirations of developing countries and instead, seeks to project and advance the views of certain developed countries…. If we not restore the priority accorded to the outstanding implementation issues, the developing countries would be forced to conclude that the ‘development’ elements in the Doha Development Agenda is only rhetoric", he said. He also referred to the unresolved issues relating to the special & differential provisions for developing countries and stressed the need to make all S&D provisions precise, operational and effective as well as non-mandatory S&D provisions be converted into mandatory ones within a specified time frame.
On Singapore issues, Mr Jaitley said – "We do not believe that all the Singapore issues are trade related…. Our strongest arguments still remain that WTO is not the right forum, that the traditional WTO principles of non-discrimination particularly national treatment are not appropriate for a development policy related issue like investment and that trade negotiators are not the right people to deal with movements of capital that have dynamics of their own". Pointing to the significant and deep differences in the views of members on many elements of these issues, Mr. Jaitley said – "Hence, we are not convinced of the appropriateness of taking a decision on modalities (for negotiations) as it does not give us any idea of the substance and direction of obligations that agreements in this area may require us to undertake".
Underlining India’s interests in the services negotiations, Mr. Jaitley reiterated that liberalisation of certain sectors was essential to accelerate growth in developing countries and emphasised that for developing countries including India the balance of benefits in the negotiations would accrue to the extent to which their service providers were allowed to supply services in important overseas markets either from remote locations or through temporary movement of natural persons. "In case the resistance among developed countries for agreeing to the request of developing countries for enhanced market access under Modes 1 and 4 continues, this would substantially erode our flexibility to make commitments in sectors of interest to developed countries", Mr. Jaitley said.
Mr. S.B. Mukherjee, Minister of State for Commerce & Industry and Mr. Dipak Chatterjee, Commerce Secretary, Government of India, were present among others of the Indian delegation at the Opening Plenary Session.
Giving India´s assessment of the multilateral trading system, the Minister said that developing countries participated in the system in the hope that it would lead to their economic betterment and not because trade liberalisation was an end in itself. The system, he said, has to meet this expectation and "the multilateral trading system has to acknowledge that developing countries cannot afford to travel at the same speed as developed countries to achieve gains. Therefore, obligations to be undertaken by the developing countries should not arise out of coercion. Rather, they should have a feeling that these obligations are in their interest and that they are in a position to accept and implement them".
Mr. Jaitley also applauded the accession of both Nepal and Cambodia to the WTO and said that India had very warm and friendly ties with these two countries.
Earlier, India´s position found an endorsement in the message of the UN Secretary General Mr. Kofi Annan to the Ministerial Conference, which was delivered by Mr. Rubens Ricupero, Secretary General, United Nations Conference on Trade and Development (UNCTAD). In his message, the UN Secretary General said – "Those who press poor countries to open their markets may indeed have those countries´ best interests at heart. But can we be surprised that poor countries are reluctant to take them seriously, when they find the markets of rich countries still closed to their products, and when they have to compete at home, and in the world market, against subsidised products from those same rich countries? These barriers and subsidies in developed countries must be phased out, as fast as possible, for the sake of humanity. To do so is in the interests of rich and poor alike. Trade barriers and distortions can hurt a country´s health whether it is developed or developing. Developed countries spend vast sums on subsidies, often propping up relatively small and unproductive portions of their economies. In the process, they hurt their own citizens twice – as taxpayers and as consumers. There are surely better ways to help those farmers in rich countries who genuinely need help, than by subsidising big exporters so that much poorer farmers in poor countries cannot feed their families. It is not hard to imagine a system under which just about everyone would be better off. Agriculture is a crucial issue. But it is not the only area where the existing world trade order is imbalanced. Opportunities for developing countries must also be opened by effective liberalisation of trade in textiles, by specific agreements that allow them to participate actively in the growing trade in services and by faster transfer of technology. Of course, developing countries also have a responsibility to help themselves. But trade liberalisation is no panacea for developing countries. For many of them, it involves considerable adjustment and social costs. There is a need for synergy and proper sequencing – between the capacities of the developing countries, the level of obligations they are to take on, the cost of implementation and the adequacy of financial and technical resources available to them. Developing countries need aid for trade and such aid must not come at the expense of aid for development.